Key Stats for Axon Enterprises Stock
- 1-Day Price Change for Axon stock: -9.4%
- $AXON Share Price as of Nov. 5: $639.53
- 52-Week High: $886
- $AXON Stock Price Target: $879.60
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What Happened?
Axon (AXON) stock plunged over 9% on Wednesday after the Taser and body camera maker missed third-quarter profit expectations, weighed down by tariff costs hitting margins for the first full quarter.
It reported adjusted earnings of $1.17 per share, which was well below the $1.54 that Wall Street had expected. Adjusted gross margins fell 50 basis points year-over-year to 62.7%, which CFO Brittany Bagley directly blamed on tariffs.
Revenue came in at $711 million, up 31% from last year and slightly above the $704 million consensus. Software and services led the way with 41% growth to $305 million.
The connected devices business, which includes Tasers and counter-drone equipment, grew 24% to $405 million but took the brunt of tariff impacts.
The company swung to a net loss of $2.2 million, or $0.03 per share, compared to a net income of $67 million in the same period a year earlier. The loss stemmed from increased R&D investments and acquisition-related costs.
Axon raised its full-year revenue guidance to $2.74 billion from a prior range of $2.65 billion to $2.73 billion.
Fourth-quarter revenue guidance of $750 million to $755 million also topped analyst estimates of $746 million.
The company announced its acquisition of Carbyne, an emergency communications platform, in a deal valued at $625 million, expected to close in Q1 of 2026.
Combined with the recent Prepared acquisition, Axon is making a significant push into 911 call center technology.
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What the Market Is Telling Us About Axon Stock
The sharp drop in Axon stock shows investors are concerned about margin pressure from tariffs, even as the top-line growth story remains intact. Bagley called the margin hit a “one-time adjustment” that’s now baked into the model, assuming tariffs remain in place.
The miss on earnings came despite strong operational execution. Year-to-date bookings are up over 30% and continue to accelerate, according to President Josh Isner.
The company’s AI Era Plan software product is on pace to contribute over 10% of U.S. state and local bookings this year.
International business delivered two of the top 10 deals in Q3, including a nine-figure cloud deal in Europe that closed in October.
Two of the company’s top 10 Q3 deals exceeded $600 per user per month, several multiples above current averages.
Corrections bookings more than doubled year-over-year, while newer products like Fusus and Dedrone saw bookings jump 3x.
CEO Rick Smith emphasized that the 911 opportunity represents the next major expansion of Axon’s ecosystem beyond body cameras and Tasers.
The company is essentially building “the nervous system of the modern police agency,” connecting everything from 911 calls to drones to officer body cameras.
The tariff headwind appears to be a near-term margin issue rather than a fundamental business problem.
Bagley expects the higher-margin software business to offset the margin pressure from connected devices over time, as software continues to grow faster than hardware.
Adjusted EBITDA margins came in at 24.9%, and the company maintained its 25% full-year margin target despite the impact of tariffs.
Isner struck a confident tone about 2026, saying, “I have no doubt we will deliver another record year,” while emphasizing that the company is “still nowhere near its ultimate potential.”
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
